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Term Life insurance is the best choice for the majority of Americans looking to purchase life insurance. When purchasing term life insurance you are purchasing coverage for a set period or term.
Examples of the most common terms are 10yrs, 15yrs, 20yrs, and 30yrs. A good policy will guarantee your rate to remain the same for the term of years that you purchase.
As a general rule of thumb, you should carry 8-10 times your annual income in good term life insurance.
How Much Does It Cost?
As you may have guessed, the longer the term (number of years), the higher the cost. The cost to cover a 30-year-old for the next 20 years is significantly less than to cover that same person for the next 30 years.
The cost you will pay for term life insurance is dependent on several factors. The first is your gender. Men are more expensive to insure than women. Because on average, women live longer than men, so they cost less to insure!
Another factor that determines the cost you will pay for life insurance is your age. The older you are the more you will pay for life insurance.
The last, and most important factor, in determining your cost is your current health condition. You may qualify for the top rate if you are very healthy, or you may be declined coverage if you have a serious health condition.
I strongly recommend purchasing good term life insurance before your health starts to deteriorate! In most cases, if you are 40 or below you should lock your rate for a 20- or 30-year term, depending on your need.
What To Look For In Term Life Insurance
Questions to ask your insurance agent before purchasing life insurance:
- What is the financial stability rating the company? (should be A-rated or higher)
- Is the rate guaranteed for the length of the term?
- Are there any price breakpoints that I should consider? (see below)
When it comes to life insurance, there are significant price breaks at the $100,000, $200,000, and $500,000 levels. A $200,000 policy is approximately the same price as a $160,000 policy.
$400,000 worth of coverage will likely cost more (yes more!) than $500,000 worth of coverage because of the large price beak that occurs at the five hundred thousand dollar level.
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